The mortgage interest rates and real estate market are two cycles that any potential homeowner should pay particular attention to.
Both rates and home prices were severely depressed during the Great Recession. But that is changing. The economy has now recovered to the point that the pent up demand for home purchases has caused the housing market to boom pretty much across the entire country. The lack of new home and apartment construction for the last few years has also caused the rental market to boom as well. The Feds decision to ease up on economic stimulus is now causing interest rates to creep back up from their historic lows to more “normal” territory. So what does this mean for a potential home buyer? This means that home prices and mortgage rates (and thus your monthly mortgage payment) are not going to be any lower than they are now until the next downtown cycle, which could be many years or decades in the future – or never.
Mortgage guidelines are also starting to ease up dramatically. Buyers with excellent credit can get mortgages with lower down payments (as low as 3.5% for FHA), so the days of having to have a 20% down payment are behind us.
There are is one big issue that you should be aware of, though. The inventory of homes for sale is very low. Here in Houston, for instance, the current inventory of homes for sale is the lowest that it has been in over a decade. Homes in popular neighborhoods are going sale pending in just a few days, and sometimes in a few hours. What does this mean for a potential home buyer? It means that you will have to compromise. It means that that well priced homes are getting multiple offers. It means that you need to be serious with your offer. The days of desperate home sellers are over.
If you are a seller, then you should also remember that you will most likely get top dollar for you home now, but you will also have to pay more for your next home and mortgage rate as well, so the longer that you wait to sell, the more that you will have to pay as well.
That’s where I come in. Let me put my 21+ years of experience to good use for you to help you sell your current home and/or purchase your new home.
Here is an excellent article from Money Talk News that explains the current real estate market in even more detail, and has some tips and issues to consider as well, to help you make an intelligent and informed decision.